The old saying that things always get worse before they get better is certainly true for Glimcher Realty Trust.

The Columbus, Ohio-based REIT is taking non-cash charges of $64 million and prepayment penalties of $10.6 million due to the sale of five underperforming malls, which is part of its repositioning strategy. The charges and pre-payment penalties forced Glimcher to lower its 2006 guidance: the REIT now expects to take a loss of $2.55 to $2.57 per share and expects FFO per share to be in the red by 63 cents to 65 cents. Glimcher says that the noncash charges will not impact the REIT's ability to pay its quarterly dividend.

“The new guidance actually has little impact — it just means that Glimcher is getting a higher value for the malls that are to be sold this year, which increases the dilution from lost NOI,” says Richard Moore, a REIT analyst with RBC Capital Markets. “The sale of these assets is highly strategic…Overall, Glimcher is making some pretty terrific strides.”

Without the impairment charges and the prepayment penalties, 2006 guidance actually increased to $2.38 to $2.40 from $2.36 to $2.40. Glimcher also updated 2007 guidance: the company now estimates earnings per share to be in the range of $1.84 to $1.94 and expects FFO per share to be in the range of $2.25 to $2.35.

Glimcher says that the process to sell five of its weakest assets has gone more slowly than anticipated, but it believes that the properties will be sold by the second quarter. It has prospective buyers for University Mall in Tampa, Fla., Almeda Mall in Houston, and Montgomery Mall in Montgomery, Ala.